UPDATE 2-Deal reached to avert U.S. port strike, for now

December 28, 2012|Reuters

Dec 28 (Reuters) - A union representing dockworkers on theU.S. East Coast and an alliance of shippers have reached a laboragreement that will avert a strike that threatened to wreakhavoc on the United States' economy.

The International Longshoremen's Association (ILA), whichrepresents 14,500 workers at 15 container ports in the easternUnited States, and the U.S. Maritime Alliance (USMX) ofshippers, terminal operators and port authorities, have agreedto extend their current contract by 30 days to finalize details,the Federal Mediation and Conciliation Service said in astatement on Friday.

Both sides have agreed "in principle" on the contentiousissue of royalty payments for shipping containers, payments toILA workers based on the tons of container cargo that movethrough a port.

The statement on Friday was light on details of the actualagreement, and the USMX declined to comment further.

The new contract does not eliminate the royalty payments,according to Benny Holland, an executive vice president for theILA.

"The royalty will stay intact. We have worked out a formulafor it," he said in an interview.

Established in 1960, the royalty payments to ILA workers are based on the tons of container cargo that move through a port.That tonnage has risen from 50 million tons in 1996 to 110million last year, according to the alliance. Total paymentslast year were $211 million, according to the USMX, or anaverage of $15,500 per worker.

The original idea of the royalty payments was to protectlongshoremen from wage losses expected as a result of"containerization," in which more and more goods are packed inthe now-familiar 20- and 40-foot long boxes. Those take lessmanpower to off-load than the less-standardized containers theyreplaced.

Both sides also fought over the guaranteed eight-hourworkday in the current contract and the seven-man "lashinggang." Lashing crews, or gangs, secure the cargo containers tothe vessel using metal lashing rods to keep them from movingwhile the vessel is at sea. The maritime alliance wanted toeliminate each.

The agreement comes as union forces felt emboldened byrecent victories by other unions across the United States. Atthe same time, shipping companies and port operators have beenusing more automation, and have seen profits shrink. The BalticDry index, which tracks the cost to ship materialsoverseas, is down 55 percent in the past year and currently atlevels it hasn't been in a decade.